Kyrgyzstan under pressure to nationalize Kumtor Gold mine

Centerra says its project has generated $1.9 billion in benefits for Kyrgyzstan, including $620 million in taxes. Kumtor accounts for 12 per cent of the economy.

BISHKEK(BullionStreet): Raising investor concerns, protests to demand the nationalization of the Kumtor goldmine in Kyrgyzstan gained momentum with protestors demanding the resignation of the prime minister.

Protesters clashed with police and tried to break into a building housing the parliament and government offices in the capital during a rally held against Centerra Gold, operator of Kumtor mine.

Around 1,000 people gathered in the centre of the city for a rally, organized by nationalist politicians Sapar Zhaparov and Kamchibek Tashiyev, ostensibly to demand the nationalization of the Kumtor gold mine.

Kyrgyzstan, a country of five million people on China's mountainous western border, has come to prominence in recent years because it hosts a U.S. airbase used to support military operations in nearby Afghanistan.

The gathering was intended to voice discontent over the mine, which has been the source of a series of toxic spills in past years.

Critics have alleged that Toronto-based Centerra Gold, which is developing Kumtor, has used accounting tricks to reduce its tax liabilities.

The company has denied the allegation. Centerra says its project has generated $1.9 billion in benefits for Kyrgyzstan, including $620 million in taxes. Kumtor accounts for 12 per cent of the economy.

Meanwhile, security services in Kyrgyzstan have arrested the former head of the state mineral resources agency in connection with a criminal probe into the embezzlement of large amounts of unrefined gold and irregular mining concession deals.

The State Committee for National Security said in a statement Monday that Uchkunbek Tashbayev, who was replaced in September, has been charged with abuse of office and illegal use of his role in the license-issuing process.

The statement did not specify the amount of gold concentrate involved, but said two units of the state-owned Kyrgyzaltyn gold company were affected.

Mining is a key draw for foreign investors in the Central Asian nation's economy, which has struggled to recover from political unrest in 2010. Recent efforts at granting mining licenses have struggled.